Last week, we learned the basics of setting Price for a Product. This week we get more specific – setting Price for your Product. What’s your Product? For most of us, it’s ourselves – either as blogger, writer/author or employee; and it’s our books or our blogs.
Your Blog as the Product
If your Product is your blog, you most likely don’t have any Price to set. Unless you charge a subscription or for advertising, which is rare for most bloggers. So if a blog is your only Product, then you can leave now. But please don’t!!! Cuz I really like you! And, you might find something useful here, whether to apply to your own Products later or to gain a better understanding of why books take up so much of your budget (besides the fact that you can’t live without them!).
Yourself as the Product
If your Product is yourself, then you must know what you’re worth – your market value. As an employee looking for a job, your Price is your salary. Before you can answer the question of what you want to make, you must know what you need to pay your bills and what people in similar positions with similar education, experience and skills make.
If you’re a writer and pursuing traditional publishing, however, you don’t have much say. The publisher pretty much determines your market value and pays you somewhat standard royalties. This is why you need an agent – someone who knows your market value and can negotiate with the publisher to ensure you’re paid fairly.
Aside for Royalties
Royalties are calculated in all sorts of ways, but in all shapes and forms, they basically come down to about $1 per book to the author, give or take around 30 cents, depending on the list price, the actual price sold, the sales and distribution channels (B&N, Amazon, indie stores, etc.) in which the particular copy was sold and the book’s format (hardback, paperback, various ebook formats, etc.)…as well as on the proven ability of the author’s name to sell books.
To give you an indication of what you can expect – a handful of top-level authors put in their contracts that they get a flat $1 per book. Period. No percentages, no difference in how the book was sold. $1 per book. The authors (and their agents) know, on average, this is a little higher than normal, but the publisher also knows these authors are worth it. So if $1 per book is good for Stephen King, what is good for you? Take off your agent’s share and you might be worth about 85 cents per book, give or take. (Kind of eye-opening? It was for me!)
Your Book as the Product
Now we get to the Product that started this whole marketing series – books. Specifically, your book. How do you price it?
Well, if you’re pursuing the traditional publishing route, don’t worry your pretty little head over it. Because you have absolutely no say. The publisher will decide how to price your book, which, in turn, determines the Price for yourself as the Product (your royalties, see above).
If you go indie, however, then you have this burden of setting your Price. So you must determine how much it will cost you to produce each book and how much you want to profit from the sale of each book. When calculating costs, factor in direct costs, such as the cost of printing one book, as well as indirect, such as the cost of the cover design, and overhead, such as advertising, membership dues, etc.
You also must realize that each distribution channel you choose wants a piece of your pie. That amount comes off the top of your list price. Some channels want as little as 40% and others up to 55%. So, taking Promise, for example, the first 40-55% of the $15.99 list price goes to Amazon and other retailers. That leaves $7.20-$9.60 to cover those other costs above (printing, cover designer, someone to format the book, ISBN, copyright and other legal issues, advertising, conferences, trade shows, signing tours, etc.).
Once you have all those numbers, then you must compare that total to the price of other comparable books: your genre, about the same size, same format, etc., and by authors with your publication background. Don’t be surprised if you find your desired price to be $28 and the market value to be half that.
So now you must make more decisions, such as how you can reduce your costs, which distribution channels you want to use and which are too expensive and if your desired profit is too much (remember that $1 figure above?). The most important decision you must make is your goal for your book.
- Do you desire to make as much money off each book as you can, even if it means fewer sales, because you’re really happy that at least a handful of people want to read it?
- Or do you desire to get your book into as many people’s hands as possible, even if it means you pocket 75 cents or even less per book?
Obviously, the more expensive a book is, the fewer people who will buy it and vice versa.
As you’re considering your goal, keep this in mind: Once the book is produced, you have a Product. You can sell as many of those products as you possibly can. It’s not like your time, which is limited to the amount you can sell. So, you may lose money on the first 100 or even 1,000 books. But then your cover design and formatting is paid off, word-of-mouth is spreading so marketing costs can be reduced and, eventually, distribution channels may be willing to renegotiate because they’re selling so many of your books. 75 cents per book at 100 sales doesn’t seem like much. But at 100,000 sales? More? Compare that to $3 per book at 100 or even 1,000 sales – and you likely won’t sell more than that if you’re book is priced too high!
Sorry this is so long-winded, but I’ve noticed pricing by indies is all over the place in the market. I also know most people have no idea the costs involved in producing a book (yes, even an ebook!) and why a book’s cost (from a customer’s perspective) might seem high. Armed with knowledge and smart decisions, you can now figure out how to price your book to meet your goals. And for those of you who aren’t writers or indie authors, I hope you can better understand that pricing a book is difficult, profit margins are low for everyone and authors only make good money if they sell tons of books.